2009.06.24 WHY 95% OF TRADERS LOSE PART III

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Paul
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xxx

Postby Paul » Sat Jan 30, 2010 4:25 pm

Hi there,

Let us face the problem from the angle of creativity and the factors impacting one's ability to be creative. The first question is whether the analyst or the trader needs creativity to achieve success. The statistics of performance says if we attribute the least creative abilities to the crowd, the public and ignore luck then the answer is definitely yes. What is creativity in forex? Like in art it is the ability to grasp the whole of the market and it is the ability to modify one's action accordingly, as the situation develops. The first prerogative is being able to to read the fullness of the market. The second prerogative is being able to react and and utilize one's observations in trading. There have been many studies on the related problems in scientific literature and I may refer to two famous principles known as the gestalt analysis and the syncretistic approach. These two principles provide a very valuable clue for forex trading why the rate of failures is so high. We need to note that we cannot be creative all the time. Managers are creative for 1 or 2 hours during their whole working day. Artists are creative for equally short time, the rest of the time is just hard labor. Therefore, before declaring who and why can be creative, we need to emphasize that even those most talented ones have better and worse moments.

The analysis of gestalt is not creative.
Only the syncretistic process is creative. Each time the syncretistic process confronts the figure with the background, the chart candles with the chart background, the realized market with the unrealized market. The candles and the background are equally important. In order to grasp the true market one has to be able to see what is hiding behind the ?empty? background. This ?empty? background is not empty at all. It is hiding various Limit Orders and stoplosses, orders to open positions and to close opened positions, protective orders, Buy Stops and Sell Stops. To crown all, the candles are static, they form a done, a still picture, whereas the background is not static at all ? it is very dynamic. For any given moment of time all the active part of the market is not where the candles are plotted but in the background. Limit Orders are placed and cancelled, placed and modified. The background is a really living and dynamic part of the market. The syncretistic method tries to read out the elements of the market that are hidden to the eye. The syncretistic method tries to grasp the whole of the market by combining the real and visible chart candles with the real yet invisible activity in the background. It resembles moving in a forest where only some of its trees can be seen. The invisible trees, the invisible ground, the invisible bushes constantly change their topology. Very often we know a trap when we are already in it. We know a tree, when we bounce against it. If we concentrate on the gestalt, or the candle work in forex words, we are doomed to failure both as analysts and as traders. If we are concentrated on nothing but the candle work, patterns, formations, figures etc. we will never be able to capture the essence of the forex market (or any financial market). There will always be something missing, unnoticed, ignored in the gestalt analysis. The gestalt approach is unable to sense dangers and risks hiding in the background. It is uncreative as much as most of the forex analyses published worldwide. Scientific studies showed that children up to the age of eight possess a very natural ability to see things syncretistically. As they grow this ability becomes duller and duller, more anxious in draughtsmanship. Much os the earlier vigour is lost. Market education seems helpless to stop this rot. What has happened is that the child?s vision has ceased to be syncretistic and has become analytic instead. The young child may neglect abstract detail, yet his powers of recognition may be superior to the duller vision of the adult. Normally our attention is drawn only by conspicuous features. These alone are then clearly differentiated. The others sink back to form an insignificant ground. Syncretistic vision is impartial because it does not differentiate figure and ground in this manner. Hence it also neglects what to analytic vision would seem important.

Let us not be misguided by various myths about analysts and traders alike. Not everyone can be creative. Their success strongly depends not on the knowledgeable part of the job but on their ability to be creative and stay creative. Let us not be overly excited with various knowledgeable methods of analyzing and trading. As a rule they will all pertain to the gestalt analysis ignoring the syncretistic approach. The rest is silence evoked by sheer statistics of failures and successes, geographically and racially completely invariant.

Conclusion: Any Expert Advice is doomed to failure in the long run. There is no Artificial Intelligence capable of being creative. Even the existence of AI is questionable as such. Mechanical systems, automata etc are bound to be defeated sooner or later by the creative part of the market.

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Postby TheRumpledOne » Sun Jan 31, 2010 4:05 pm

Paul:

Did you really mean to post the same thing 4 times?
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!

Please do NOT PM me with trading or coding questions, post them in a thread.

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Re: xxx

Postby franck » Sat Feb 06, 2010 4:20 am

Paul wrote:Hi there,

Let us face the problem from the angle of creativity and the factors impacting one's ability to be creative. The first question is whether the analyst or the trader needs creativity to achieve success. The statistics of performance says if we attribute the least creative abilities to the crowd, the public and ignore luck then the answer is definitely yes. What is creativity in forex? Like in art it is the ability to grasp the whole of the market and it is the ability to modify one's action accordingly, as the situation develops. The first prerogative is being able to to read the fullness of the market. The second prerogative is being able to react and and utilize one's observations in trading. There have been many studies on the related problems in scientific literature and I may refer to two famous principles known as the gestalt analysis and the syncretistic approach. These two principles provide a very valuable clue for forex trading why the rate of failures is so high. We need to note that we cannot be creative all the time. Managers are creative for 1 or 2 hours during their whole working day. Artists are creative for equally short time, the rest of the time is just hard labor. Therefore, before declaring who and why can be creative, we need to emphasize that even those most talented ones have better and worse moments.

The analysis of gestalt is not creative.
Only the syncretistic process is creative. Each time the syncretistic process confronts the figure with the background, the chart candles with the chart background, the realized market with the unrealized market. The candles and the background are equally important. In order to grasp the true market one has to be able to see what is hiding behind the ?empty? background. This ?empty? background is not empty at all. It is hiding various Limit Orders and stoplosses, orders to open positions and to close opened positions, protective orders, Buy Stops and Sell Stops. To crown all, the candles are static, they form a done, a still picture, whereas the background is not static at all ? it is very dynamic. For any given moment of time all the active part of the market is not where the candles are plotted but in the background. Limit Orders are placed and cancelled, placed and modified. The background is a really living and dynamic part of the market. The syncretistic method tries to read out the elements of the market that are hidden to the eye. The syncretistic method tries to grasp the whole of the market by combining the real and visible chart candles with the real yet invisible activity in the background. It resembles moving in a forest where only some of its trees can be seen. The invisible trees, the invisible ground, the invisible bushes constantly change their topology. Very often we know a trap when we are already in it. We know a tree, when we bounce against it. If we concentrate on the gestalt, or the candle work in forex words, we are doomed to failure both as analysts and as traders. If we are concentrated on nothing but the candle work, patterns, formations, figures etc. we will never be able to capture the essence of the forex market (or any financial market). There will always be something missing, unnoticed, ignored in the gestalt analysis. The gestalt approach is unable to sense dangers and risks hiding in the background. It is uncreative as much as most of the forex analyses published worldwide. Scientific studies showed that children up to the age of eight possess a very natural ability to see things syncretistically. As they grow this ability becomes duller and duller, more anxious in draughtsmanship. Much os the earlier vigour is lost. Market education seems helpless to stop this rot. What has happened is that the child?s vision has ceased to be syncretistic and has become analytic instead. The young child may neglect abstract detail, yet his powers of recognition may be superior to the duller vision of the adult. Normally our attention is drawn only by conspicuous features. These alone are then clearly differentiated. The others sink back to form an insignificant ground. Syncretistic vision is impartial because it does not differentiate figure and ground in this manner. Hence it also neglects what to analytic vision would seem important.

Let us not be misguided by various myths about analysts and traders alike. Not everyone can be creative. Their success strongly depends not on the knowledgeable part of the job but on their ability to be creative and stay creative. Let us not be overly excited with various knowledgeable methods of analyzing and trading. As a rule they will all pertain to the gestalt analysis ignoring the syncretistic approach. The rest is silence evoked by sheer statistics of failures and successes, geographically and racially completely invariant.

Conclusion: Any Expert Advice is doomed to failure in the long run. There is no Artificial Intelligence capable of being creative. Even the existence of AI is questionable as such. Mechanical systems, automata etc are bound to be defeated sooner or later by the creative part of the market.


How r u Paul? Thanks for your sharing, words which have always been provokingly truth :)

My current view on profit/loss is that it is a function of one's holding period in the currents of order flows. No systems would be able to predict the background from the realized market, but limited to feel/understand a part of market's nature only and the fact that too many are using gestalt products with certain predictability. Correct knowledge creates correct creativity. There is no lack of creativity in the creation of marketing/sales of the gestalt product itself in everyday's newspaper.

in the study of market background, where do u suggest we begin our search? i can understand the great value of what u can share. my sincere thanks are beyond words.
* anyOne can be prOfitable tradING ANY line. see it?

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Postby bredin » Sat Feb 06, 2010 9:00 am

franck,

Sam Seiden.
Welcome to the era of "Guns and Maskies" Trading!
The previous message contains discretion. Viewer nudity is advised.
Insanity Industries Indicators Here
Insanity Industries on YouTube!

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Postby franck » Sat Apr 10, 2010 10:15 am

bredin wrote:franck,

Sam Seiden.


Thanks Bredin. The closest so far is still TRO/MO.
* anyOne can be prOfitable tradING ANY line. see it?

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Re: bumble bees

Postby MightyOne » Sat Apr 10, 2010 5:19 pm

leonyde wrote:
Paul wrote:Animals do not have mass media. They act on on what they see and know themselves, not on prompts from anybody who has never grazed grass.


This statement says it all, it is the most important and interesting of your whole post! Until now I was just reading, but I feel I can contribute a bit and relate to my personal experience. Nothing much related to trading, just life in general.

I'm sort of travelling since 2 years, meaning I don't really stay at the same place more than 3 months. To limit the amount of things I have to carry, I did not buy a TV (I also simply didn't feel the need to). Basically I am living without TV and RADIO since 2 years!

This has had a very positive impact on me. Now I am not disturbed by all that noise, all those "breaking news" that you should be shocked about. Do I need to know that a guy took a gun and killed 10 student in a school before killing himself? Do I need to know that some crazy guy kill his wife and his kids with a kitchen knife? Do I need to know that some politician is *censored - swear word* his assistant? Well no, I don't.

This is just too much information for my brain to analyse. See for yourself, just watching the news for 5min I am sure you can find something that will make you "angry", "sad", etc That will make you react. Why would you loose your time - reacting - thinking - and using all your brain resources on something that somebody else planned for you?

My point is that all those "informations" given by Mass Medias are for the most unecessary in my/our own life. This is just polluting our head with useless informations, linked to emotion like greed, stress and fear.

I believe we also act based on our own experience, but when this experience is only made of TV, when it is made and manipulated by others (of who we don't know/understand the exact intentions)... What will be the consequences?

Personally I can say, I just feel better. I live better. I am better with others. I became a better person than I was 2 years ago. I have less problems now, only the ones of my own life. Life became way more simple and interesting.

Of course this is not only the results of not watching tv, there is also my personal growth, my readings, my willing to educate myself, etc that have to do with that. But I believe switching off the news was a very important part of the process... It allowed me to reach the "next level".

I let you do the parallel with trading...


I don't even own a TV.

The last time I purchased a TV was for my lady friend and ended up setting them both down at the curb on trash day ;)

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Postby frang0nve » Sat Apr 10, 2010 7:39 pm

When I rented my apartment, there was a TV set in it...

Being an TV addict in remission I told the landlord's agent to take it away in front of the dropping jaws of this man and my girlfried, that couldn't understand anything...

Then I gave her two options:

Living with me or living with a TV set.

And she decided to live with me...

Only fairy tales end happily!!! :(

Cheers


Francisco

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Postby jimbob » Sat Apr 10, 2010 10:41 pm

i haven't attempted to read this entire topic, so if i have repeated something that has already been observed, please excuse me.

i believe that 95% of trader lose (if that is an accurate figure) is because they think they see a specific pattern in their choice of trading vehicle, and put their money on the line.

i have been watching stock trading for years, and have found dozens (perhaps hundreds?) of patterns that appeared to offer profitable opportunities...but after coding and backtesting them, i have found only one to be profitable over the years.

that being said, i found it necessary to alter the code from time to time in order to adjust to the trading invironment. i am presently finding that my system is avoiding any trading at all (perhaps in light of the low volume in stock trading in recent months)...however i can find no way to increase my trading; and in fact i think my system has chosen the wisest course in simply not entering trades.

someone once pointed out that "Flat is also a position".

(it still doesn't make it any easier to watch weeks go by without putting money on the table).

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Postby Patch » Sat Apr 10, 2010 11:25 pm

jimbob

Wondering what trade strategy you found that finally proved profitable for a time? How long did it prove to trade profitably? and how often did you find you had to make changes? and how long of time between changes?

Patch
InVA
ENOUGH being a Yalie for me Back to the Sea. "What i can lose, i can win" "YES YOU CAN" - dragon33 -"Pick one method and one pair and stick with them until you master it. "The choice is yours - success or failure." TRO

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Postby jimbob » Sun Apr 11, 2010 2:46 pm

Patch,

i think of my system as a sort of combination lock with 10 tumblers. each tumbler must fall before the lock opens; and there must be significant movement in the indexes.

the first is breakouts/breakdowns of the major indexes, the last confirming movement of the stock in play. i first started trading this system about 5 years ago, after a series of losing strategies, or simply using discretionary entries/exits.

since then, once or twice a year i have either found something that improved profits, eliminated some unnecessary elements, or adjusted for market volume or volatility.

generally speaking, when the market goes thru periods of low volume such as we have seen recently, i look to see if i can push up activity without losing performance. i think i have reached the limits of what i can do with the system, so i guess i'll simply have to wait it out; until something gets trading hyped up again.


Patch wrote:jimbob

Wondering what trade strategy you found that finally proved profitable for a time? How long did it prove to trade profitably? and how often did you find you had to make changes? and how long of time between changes?

Patch
InVA

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